ALJDEC decisions subject to certification as final

2019A-02850-CHC-ROC · Registrar of Contractors · 2019-12-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brian Bowers,

COMPLAINANT

ABCO Solar Inc.,

ROC License: ROC 258378,

RESPONDENT

No. 2019A-02850-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: October 29 and November 26, 2019

APPEARANCES: Steven R. Beeghley, Esq. appeared for Complainant on October 29, 2019; Complainant appeared on his own behalf on November 26, 2019; David Shorey appeared for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On September 9, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on October 9, 2019 at the Office of Administrative Hearing. The matter was convened on that date and concluded on November 26, 2019.

The hearing was set to consider the charges made in the complaint and citation that were served on Respondent ABCO Solar Inc. ROC alleges that Respondent violated Ariz. Rev Stat. sections 32-1154(A)(2), (A)(3)(R4-9-108), (A)(9), and 32-1154(A)(22).

Respondent holds license No. 258378 issued by ROC. David Shorey, Respondent’s vice-president appeared for Respondent and testified on its behalf. Respondent also presented the testimony of Klaus Wyatt and Patricia Blackman.

Complainant is Brian Bowers. Mr. Bowers was represented by an attorney on the first day of the hearing, but appeared on his own behalf on the second day. Mr. Bowers and his wife Margeaux Bowers testified for Complainant.

ROC investigator Greg Johndrow also testified.

Mr. and Ms. Bowers own Conrew LLC that owns the Oasis apartment building located in Tucson Arizona.

Respondent and the Bowers/Conrew LLC entered a contract in which Respondent was hired to install a photovoltaic or solar electric system at the apartments. The parties subsequently amended that Contract and then entered into a third agreement related to the project that also included as a party the Bowers/Conrew LLC’s lender.

At issue are Mr. Bowers’s allegations that Respondent hired unlicensed contractors who damaged the parking lot and a fence, that Respondent did not comply with contractual deadlines, and that the system was not complete because the remote monitoring system was not operational.

Exhibit R 1 is the original Contract between Respondent and the Bowers/Conrew LLC dated February 5, 2018. The total cost of the project was $949,687.

The original Contract set out a suggested payment schedule that called for the Bowers/Conrew to pay 40% or $379,875 on signing of the contract, but the Contract itself was contingent on Conrew obtaining financing for the project. Mr. Bowers acknowledged that this payment was not made.

The original Contract called for the project to be completed within 90 days of the issuance of the required permit, but also shows that the Bowers were aware that project was “subject to design, jurisdictional permitting and manufacturer delivery of equipment.”

On August 7, 2018, Respondent and the Bowers/Conrew LLC entered an Amendment to the original Contract that called for Respondent to start work on the project by August 15th and to finish work by December 31, 2018. Exhibit R 2.

The Amendment shows that the Bowers were refinancing the apartment building and that they anticipated receiving sufficient funds to pay for the project. The Amendment also set out a payment schedule and shows that the Bowers would make a payment of $233,640, the minimum needed to start the project, using personal funds. In total the Bowers paid to Respondent about $306,000 with personal funds before they obtained financing.

Although Respondent provided the Bowers/Conrew with potential lending sources, the Bowers/Conrew were unable to obtain financing from those sources.

Mr. Bowers asserts that Respondent misled the Bowers as to their experience and the availability of financing, but these allegations were rejected by ROC.

On November 19, 2018, the Bowers/Conrew obtained financing for the project from First Northern Bank of Dixon (the “lender”).

On January 31, 2019, the Bowers/Conrew, Respondent, and the lender entered a Progress Payment Disbursement Agreement. That Agreement modified the terms of the original (February 5, 2018) Contract by setting out a schedule by which the lender would make payments provided that specified conditions were met. Exhibit R 3.

The Progress Payment Disbursement Agreement does not reference the parties’ August 7, 2018 Amendment to the Contract.

The various payment schedules set out in the three contracts were not adhered to, with the parties offering conflicting testimony and opinions as to why.

Respondent applied for the required permit in October 2018 and the permit was issued on November 18, 2018. The system was operational as of May 22, 2019.

Ms. Blackman was working on the permit long before Respondent submitted the application. She explained that it would be foolish to submit a permit application before working out all the details of the project because changes to the design will result in changes to the application.

Ms. Blackman also explained that companies that finance solar projects sometimes require use of specified components; consequently, a permit application should not be completed until the financing is secured and any specific requirements of the financing company are known.

The permit application for this project was not typical of Ms. Blackman’s experience with other projects. Reasons for this include that the Bowers had a difficult time arranging for financing and multiple finance companies were involved, which led to delays; the property’s southern boundary was recorded improperly (i.e., the city or county records were in error) and it was necessary to redesign the system to conform with the actual boundary; and then the City called for a design review, which required getting approval of the Bowers/Conrew’s neighbors.

The Bowers were aware of these issues and, with regard to the design review, the Bowers and Respondent’s personnel were working together to obtain signatures from the neighbors.

The system was producing electricity as of May 22, 2019. There has been some downtime since then, but even with that downtime, the system’s output has been about 16% above the “Expected Output" as defined by the Department of Energy’s National Renewable Energy Laboratory.

The Bowers were obligated to provide an internet connection that is required for the wireless monitoring system, but did not provide that connection until August 2019.

Prior to the Bowers providing the internet connection, Respondent’s suppliers had indicated that a cellular connection would work in lieu of the internet connection. Respondent made an attempt to provide the remote monitoring system using a cellular connection, but it did not work.

As of the hearing dates, the remote monitoring system was not yet operational, but this was a result of defective circuit boards in equipment Respondent purchased for the project. The system could be monitored and Respondent was doing so, just not remotely. Respondent expected to have replacement parts soon after the second day of hearing.

While installing the system, Respondent did work including hiring an independent person to operate a mechanical sweeper to clean the parking lot. That person was not licensed by ROC.

Although Respondent caused some damage to the parking lot, the asphalt was old and deteriorated and in poor condition before Respondent began its work. Mr. Bowers had resealed the lot in August 2018 and had it restriped at that time.

At the hearing, Mr. Wyatt provided credible testimony about his discussions with several contractors regarding the condition of the asphalt parking lot. The upshot of these discussions was that the asphalt was too old and in too poor of condition to be seal coated.

On June 3, 2019, Mr. Bowers filed with ROC his complaint against Respondent.

At the time Mr. Bowers filed the complaint, the Bowers/Conrew still owed Respondent $94,969. As of the hearing dates, the Bowers/Conrew had paid the remaining balance to Respondent, but only because their lender was assessing penalties against them for failing to pay.

ROC Investigator Mr. Johndrow conducted a jobsite investigation on June 28, 2019.

On July 17, 2019 ROC issued to Respondent a Directive that required Respondent to remedy by appropriate means:

Complaint Item 1: "During installation at 2550 North Dodge ABCO employees and unlicensed contractors hired by ABCO did extensive damage to the parking lot...The scrubbing attachment to remove mud and construction debris from the 2 parking lots. The scrubbing attachment had stiff bristles that removed the sealcoating and sections of asphalt from the parking lots. Both parking lots had been sealcoated and striped prior to commencement of the project.

(Complainant's description of the degraded seal coating and striping of the parking lots.)

The Respondent shall correct damage to asphalt, seal coating and striping.

Complaint Item 2: "ABCO employees also damaged the south fence by driving a forklift over the fence post."

Complaint Item 5: "ABCO did not [finish] the job in 90 days as per the contract."

(Complainant's description of the work not completed per contract.)

The Respondent shall complete all work per contract agreement.

The Directive shows that ROC had determined that any other workmanship violations alleged in Mr. Bowers’s complaint were unsubstantiated.

The Directive required Respondent to provide ROC with written proof that it had made the required corrections by no later than 5:00 p.m. August 9, 2019.

After the Directive was issued, Respondent continued to work on the solar electric system, made what it believes were the required repairs to the fence post, and obtained bids to have the parking lot resealed and restriped.

The asphalt was too old and too severely degraded for sealcoating and Respondent could not find a contractor who was willing to do so.

The parties engaged in settlement discussions regarding the parking lot, with Mr. Bowers taking the position that it was necessary for Respondent to completely repave the lot, whereas Respondent offered to pay Mr. Bowers an amount that would cover resealing and restriping a lot the size of the one at issue.

The parking lot is about 27,000 square feet.

Through an email dated July 22, 2019, Mr. Johndrow confirmed that ROC was ordering Respondent to “repair damaged asphalt, seal coat and stripe. It is not intended for complete replacement of all asphalt.”

Because the parties could not resolve the matter and Respondent did not complete the work ROC ordered it to complete by the deadline imposed by ROC, ROC issued to Respondent a citation on August 16, 2019.

Through the citation ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3)(R4-9-108), (A)(9) and (A)(22).

At the hearing, Mr. Bowers agreed to accept from Respondent $600 to resolve the issue related to the damaged fence post.

The parties reaffirmed their positions regarding the parking lot with Mr. Bowers asserting that Respondent should be required to repave the entire parking lot, and Respondent effectively taking the position that this would be a windfall to the Bowers/Conrew.

The parties each introduced photographs in support of their positions regarding the amount of damage to the parking lot Respondent may have caused. Mr. Johndrow’s jobsite inspection notes include photographs showing damaged areas that Mr. Bowers alleges was caused by the Respondent, but also included areas that Mr. Bowers had acknowledged were not damaged by Respondent.

In evidence is a bid from Ace Asphalt in which it proposed to patch 16 spots totaling about 2300 square feet and then apply an emulsified asphalt and a PAG type II cationic micro surface to the entire parking lot for a total cost of $18,460, with $3510 covering the patching and $14,950 the micro surfacing.

Also in evidence is a proposal from Old Pueblo Sealcoating showing a cost of $6100 to sealcoat and stripe a lot the size and configuration of the Bowers/Conrew lot. Old Pueblo Sealcoating was not willing to do the work however because if found that the lot was too deteriorated.

Although it appears that Respondent never offered Ace’s approach to the Bowers, the record does not show why. The record does show however, that the Bowers/Conrew had been willing to accept a financial settlement consistent with Ace’s proposal.

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2).

“At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3).

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

At the times pertinent to this matter, Ariz. Rev. Stat. section 32-1154(A) provided that

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

*****

2. Departure from or disregard of: (a) Plans or specifications ... in any material respect that is prejudicial to another without consent of the owner ... and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications....

*****

3. Violation of any rule adopted by the registrar.

*****

(9) Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.

*****

22. Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar....

Ariz. Admin. Code section R49108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.”

Ariz. Rev. Stat. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of Ariz. Rev. Stat. section 32-1154(A)(22).

Subject to certain exceptions, a person must have contractor’s license if he intends to construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement.... Ariz. Rev. Stat. §§ 32-1151 and 32-1101(A).

Ariz. Rev. Stat. section 32-1154(A)(2)

It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(2). Complainant raises three issues: that Respondent did not complete the project within 90 days of the issuance of the permit or by December 31, 2018, and that the wireless monitoring was not operational.

Three agreements are at issue: the Contract, the August Modification, and the Progress Payment Disbursement Agreement. The evidence shows that during the parties’ course of performance each deviated from the terms of these contract(s). In addition, it appears that through the course performance, the Bowers/Conrew consented to changes in the deadlines by which the project was required to be completed. Consequently, Mr. Bowers has not shown that the 90-day or the December 31, 2018 deadlines are binding on the Respondent.

Regarding the wireless monitoring, the preponderance of the evidence shows that the Bowers/Conrew failed to meet their obligation to provide internet access in a timely manner, and Respondent was not responsible for the failure to provide this service before Mr. Bowers filed his complaint. Although the service was not operational as of the hearing date, this was the result of equipment failure, which is excused by section 3 of the original Contract.

Ariz. Rev. Stat. section 32-1154(A)(3)

The preponderance of the evidence shows that Respondent violated Ariz. Admin. Code section R49108(A) and Ariz. Rev. Stat. section 32-1154(A)(3) by damaging the fence post and causing damage to the parking lot.

Although the parties dispute the scope of the damage to the parking lot, the evidence is sufficient to show that Respondent did cause some damage. Respondent’s argument that the lot was in poor condition before it began its work is unavailing because Respondent should not have swept the lot if the condition was such that it could not withstand that sweeping.

Mr. Bowers has not shown by a preponderance of the evidence that Respondent caused damage to the extent that Respondent is responsible to completely repave the lot. To the contrary ROC ordered Respondent only to patch and seal coat the lot.

Regarding the repair to the fence post, the parties have resolved the issue related to the repair of the post, on the same terms that Respondent offered before the hearing.

Ariz. Rev. Stat. section 32-1154(A)(9)

The preponderance of the evidence does not show that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(9), because the work that Respondent had an unlicensed person perform, sweeping the parking lot, is not contracting within the meaning of Ariz. Rev. Stat. section 32-1101.

Ariz. Rev. Stat. section 32-1154(A)(22)

The preponderance of the evidence shows that Respondent did not comply with ROC’s Directive within the time ordered, but its failure to do so was justified and Respondent has not violated Ariz. Rev. Stat. section 32-1154(A)(22).

Regarding the repairs to the parking lot, because the parties have a good faith dispute about the extent of the damage, it would be unreasonable and unfair to find a violation subsection 32-1154(A)(22) on the facts presented at the hearing.

Regarding the wireless monitoring system, Mr. Bowers did not prove that the Bowers/Conrew provided the necessary internet access before the expiration of the Directive, consequently, Respondent could not complete the repair ROC ordered it to make in the time allotted.

Conclusion

Respondent has violated Ariz. Rev. Stat. section 32-1154(A)(3) and is subject to discipline.

ROC’s website shows that Respondent has been licensed since September 3, 2009 and it has no prior disciplinary infractions, which is a factor in mitigation.

There was no substantial evidence adduced to show that Respondent is unscrupulous, unqualified, or financially irresponsible, which is a factor in mitigation.

Considering the facts and circumstances of this matter, Respondent should be required to pay the Bowers/Conrew $600 for the fence post, $3510 to cover the cost to patch the asphalt, and $6100 to cover the cost of sealcoating and striping the parking lot. See Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (App. 1990)).

RECOMMENDED ORDER

IT IS RECOMMENDED that on the effective date of the final Order in this matter, the Registrar of Contractors suspend ABCO Solar, Inc.’s license number 258378 until such time as ABCO provides proof that it has paid to the Bowers/Conrew LLC $10,210;

IT IS FURTHER RECOMMENDED that if ABCO makes the required payment before the effective date of the final Order in this matter, then no suspension should be imposed.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order is forty days after the date of that certification.

-54864001

001

-137160-45720000Done this day, December 16, 2019.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

001

-137160-45720000